Matt Hrivnak

Kaizen: There's always another future state

Questions people often have:  What are the long term effects of Lean Manufacturing?  What does Lean Manufacturing do for a company?  What are the benefits of Lean Manufacturing? How can I engage management and stakeholders so that Lean is taken seriously? etc.  I guess the proof really is in the pudding.  People can deny it all they want, but Lean works.  This simple post, showcasing three stocks that have all had been significant in the progression (and in a lot of cases, regression) of manufacturing principles and techniques, tells the story.  In the chart below, I’ve overlaid the following stocks, Toyota (NSYE:  TM), Ford (NYSE:  F), and General Motors (NYSE:  GM) for the comparison of their performance over the past 30+ years.  Now, when you compare stocks, they are graphed by % gain over time, allowing you to see the real difference in the stocks. 

Look at how GM (BLUE LINE) remains rather flat, while Ford (YELLOW LINE) makes some gains and then retraces, and then, then look at Toyota (BLACK/RED LINE), who makes consistent gains, retraces ever so slightly, and then makes bigger gains, and so on.  That consistency and longterm growth is what all Lean companies are striving for; that is why you implement Lean.  Seriously, look at the difference in % gain (which essentially shows you what % you would have made on your money if you invested it at the time this chart began):  Toyota topped out at 9,500%!!!, F topped out at 1,200%, and GM barely cracked 200%.  It’s even more stimulating to see that at the present time (far right side of the chart), GM and F are both close to being a wash.  Well, in reality, you might have even lost money due to inflation, the time value of money, opportunity cost, etc.  And then look at Toyota at the present time, if you’d put money into this stock in 1974, you would be up a mere 6,500% – not bad for an automaker stock!!  This is always a good chart to show to anyone that doubts the significance of Lean Manufacturing and the exceptional company that Toyota has been, and will continue to be in the future.  An even better chart is this next one, which shows the difference in these stocks over the past 10 years. 


If you would have invested in Toyota 10 years ago, you’d have made 95% on your money, almost doubling it, assuming you still held it today.  In fact, at one point you could have sold it at the high time in early 2007 and made ~165% on your money.  And then there’s Ford and GM.  If you would have put your money into either one of these companies 10 years ago, you’re looking at losses of up around 60% for GM and 65% for Ford.  When the times got tough, Toyota started to diverge from F and GM, and both of these graphs illustrate this point perfectly. 

 I’m a fairly active trader always willing to make investments in companies just making the transition to Lean.  Now, a lot of companies do not come right out and say it, but you can sometimes find this information through press releases or news coming out of publicly held companies, either by information you gain from your trading company or by using a resource like (which is where this chart was generated!).  Not only are Lean Manufacturing companies worth working for and doing business with, they are also very much worth a little piece of your portfolio.  Cheers!

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Comments (0) Posted by matt on Tuesday, April 22nd, 2008

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